REAL ESTATE - The $10.7bn (€7.8bn) Los Angeles City Employees’ Retirement System has appointed Courtland Partners as its new real estate consultant, resulting in a loss for incumbent consultant The Townsend Group.
The fund's investment officer Wayne Ige said: "Both of these two firms are very high qualified real estate consultants. The pension fund board felt that it would be a good move to get some new perspective on our real estate investment strategy."
The new contract with Courtland Partners should be signed over the next couple of months. During this time the company will be setting up a new regional office in Los Angeles.
It has not been determined at this time which person at Courtland will be responsible for the Los Angeles City account and run the new office. The contract with Courtland will run for three years. It will have a fee of $270,000 per year.
The Townsend Group had spent a lot of time working with Los Angeles City over the past year on its real estate investment strategy. One of the more significant additions to the strategy was the approval of an emerging manager policy.
The pension fund has also been approving several investments in commingled funds. In March it approved up to $114.1m ($84m euros) into three commingled funds. The investments were in CB Richard Ellis Strategic Partners UK III, Colony Investors VIII and CityView LA Urban Land Fund I.
Courtland Partners will have the chance to put its stamp on the real estate portfolio of Los Angeles City. The pension fund still has a ways to go before it reaches its long-term targeted real estate allocation of 7%.
The pension fund’s real estate portfolio has a current value of $458.3m. This amounts to 4.2% of the pension fund’s $10.7bn of total assets. Townsend had recommended to Los Angeles City that it invest around $200m a year in real estate for the next two to three years to reach its targeted allocation level. This approved strategy was mostly to be done through commingled funds.
